February 24, 2021
Company name:
Representative:
Inquiries:
Tel:

ES-CON JAPAN Ltd.
Takatoshi Ito, President &Representative Director(TSE 1st Section, code: 8892)
Minoru Nakanishi,
Senior Managing Director+81-3-6230-9308

Notice of Issue of New Shares through Third-Party Allocation, Partial Amendment of
Articles of Association, (Planned) Change in Parent Company, and Conclusion of
Agreement on a Capital and Business Partnership with Chubu Electric Power Co., Inc.
On August 28, 2018, ES-CON Japan Ltd. (ES-CON Japan) concluded an agreement on a capital andbusiness partnership with Chubu Electric Power Co., Inc. (“recipient of allotment” or “Chubu ElectricPower” hereinafter). ES-CON Japan announced the passing of a resolution at today’s board of directors
meeting; the resolution concludes a new agreement on a capital and business partnership with Chubu
Electric Power (“business partnership agreement” hereinafter; the capital and business partnershipbased on this agreement referred to as “business partnership” hereinafter) and an issue of new sharesthrough third-party allotment to Chubu Electric Power (“capital increase by third-party allotment”
hereinafter), and agrees to submit to the 26th Ordinary General Meeting of Shareholders of ES-CON
Japan, scheduled for March 26, 2021 (“General Meeting of Shareholders” hereinafter), the following
matters: (i) proposal on this capital increase by third-party allotment of shares; (ii) proposal on the partial
amendment of the Articles of Association to increase the authorized number of shares necessary to
implement this third-party allotment. Proposals (i) and (ii) shall be referred to collectively hereinafter as“proposals related to this capital increase by third-party allotment,” as outlined below. Among other goals,
these measures seek to strengthen joint efforts between the two companies.
In addition, ES-CON Japan’s parent company is expected to change as a result of this capital increaseby third-party allotment.
I. Issue of new shares through third-party allotment
1. Details of public offering(1)
Deadline for payment
April 5, 2021
Number of new shares(2)
26,619,000 shares of common stock
to be offered(3)
Paid-in amount
769 yen per share(4)
Total paid-in amount
20,470,011,000 yen
Method of offering or
Third-party allotment(5)allotment (recipient of(Chubu Electric Power Co., Inc.)
allotment)
The pay-in of funds outlined by each of the items above isconditional on the validity of the securities notification under the
Financial Instruments and Exchange Act; the lawful and valid
receipt by the Japan Fair Trade Commission of the notification
stipulated in Article 10, Paragraph 2 of the Act on Prohibition ofPrivate Monopolization and Maintenance of Fair Trade (Act No. 54(6)Other mattersof 1947 and subsequent amendments); the passage of 30 days (orshortened period if said period is shortened by the Japan Fair
Trade Commission under the proviso to Article 10, Paragraph 8 ofthat Act) from the date of receipt of such notification; approval at
the General Meeting of Shareholders of proposals related to thiscapital increase by third-party allotment; and satisfying thepreconditions stipulated in the business partnership agreement.

12. Reasons for this public offering of shares through third-party allotment
As a general developer of multifaceted real estate projects, ES-CON JAPAN focus on condominium
development. Other activities encompass retail, logistics, and hotel development, as well as land
readjustment. We strive to realize the following Management Policy: (i) We will use our information
networks, planning ability and product development expertise to tap the unlimited potential of real estateand create new value that thoroughly satisfies our clients; (ii) We will rely on our strong defense ofoperations management revolving around ROA and thorough management of cashflow and risk toachieve a strong offense in management that is always one step ahead; (iii) We will become an eliteteam of professionals with an unchanging ability to swiftly and deftly respond to a rapidly-changing
society; (iv) We will always show respect and gratitude to our colleagues, whether inside or outside of
the company, and build and maintain excellent collaborative relations; and (v) We will prioritize
compliance and governance, bolstering our internal auditing system, and form an organization with greatbottom-up communication.
Effective August 28, 2018, based on the judgment that leveraging strengths in real estate planning andbusiness know-how, combined with the strengths of the Chubu Electric Power Group (as of December
31, 2020, consisting of 38 subsidiaries and 48 affiliate companies, in addition to Chubu Electric Power;“Chubu Electric Power Group” hereinafter), including its energy supply networks, customer base in the
Chubu region, and facility construction know-how accumulated through years of activity in the electric
power business, can reasonably be expected to generate various synergies and maximize the corporate
value of both companies, we concluded an agreement on a capital and business joint venture with andbecame an equity-method affiliate of Chubu Electric Power. Since then, the real estate industry has
grown steadily, as reflected in the growth of our assets and financial results on a consolidated basis fromtotal assets of 109,747 million yen, net assets of 27,359 million yen, and net sales of 54,325 million yen
in the term ended December 2018 to total assets of 132,696 million yen (up 22,949 million yen year onyear), net assets of 33,546 million yen (up 6,187 million yen year on year), and net sales of 72,106 million
yen (up 17,781 million yen year on year) in the term ended December 2019 and total assets of 149,423
million yen (up 16,727 million yen year on year), net assets of 38,627 million yen (up 5,081 million yen
year on year), and net sales of 77,308 million yen (up 5,202 million yen year on year) in the term ended
December 2020. In March 2019, based on our view that the Chubu region is an important businessterritory, together with the greater Tokyo region and the Kansai region, we opened the Nagoya Branch
and began joint condominium and product development businesses with the Chubu Electric Power Group.
Since acquiring a condominium site in June 2019 located in Higashi Ward, Nagoya, as part of a joint
project with Chuden Real Estate, a subsidiary of Chubu Electric Power, we acquired anothercondominium site in Higashi Ward, Nagoya, in September 2019; a commercially zoned site in Suita,
Osaka Prefecture, in March 2020; and a commercially zoned site in Ichinomiya, Aichi Prefecture, inAugust 2020. Plans call for sales of condominiums constructed on the sites acquired in Higashi Ward,
Nagoya, to begin from 2021-2022. In August 2020, we launched the Group’s first condominium
development project in Shizuoka Prefecture on a site operated by the Group as a parking lot since 2016.
In these and other ways, synergies with Chubu Electric Power are emerging and gathering strengthen invarious joint efforts.
However, the COVID-19 pandemic affecting not just Japan but the entire world has led to large-scaleconstraints on economic activities and dramatic changes in social and economic conditions. These
conditions compelled us to revise the timing of the sale of the hotel projects and led to a gap in the timingof sales of various logistics sites. As a result, on December 22, 2020, reflecting expectations of decreased
earnings, we announced revisions to the consolidated net sales of 86,000 million yen in planned
consolidated financial results for the period ended December 2020 and previously announced on January
30, 2020.
Even under such business conditions, consolidated net sales in the period ended December 2020 grew
5,202 million yen to 77,308 million yen, up from the figure of 72,106 million yen in the period ended
December 2019. The impact of COVID-19 on our business proved relatively light compared to initialexpectations. For this reason, ES-CON JAPAN see this as an excellent opportunity to advance further
business growth and to stabilize management foundations, based on medium- to long-term management
strategies. We have identified the following two points as basic management strategy policies:(i) Establishing business foundations capable of withstanding unexpected changes in economic
conditions－Establishing solid business and financial standings capable of maintaining fundraising means
under any economic conditions

2

(ii)

Simultaneously transforming the revenue structure and expanding business domains－Transforming the revenue structure from one based on flows to one based on stock by growing
the real estate leasing business while realizing business diversification and expansion of businessterritories

Based on the repeated consideration of various options and seeking the most effective means ofrealizing the two points above in medium- to long-term management strategies, we have chosen to
implement this public offering of shares through third-party allotment. This decision is based on theassessment that becoming a consolidated subsidiary of Chubu Electric Power, which boasts strong
corporate credit standing, through issue of shares of ES-CON JAPAN common stock (“common stock”
hereinafter) through third-party allotment with Chubu Electric Power as the planned recipient (“capitalincrease through third party allotment” hereinafter) will allow diversification of fundraising methods andreduce fundraising costs by improving our creditworthiness. The move will also enable participation inlarge-scale urban-development projects through further business partnerships with the Chubu ElectricPower Group. This will provide increased access to real estate information and, by extension, make itpossible for us to increase our corporate value still further by increasing earnings potential and enhancing
management stability.
As described under “3. Amount, purpose of use, and planned timing of investment of funds raised: (2)Specific purpose of use of funds raised” below, ES-CON Japan recognizes the need to strengthen its
financial standing through equity capital enhancements, with the goal of transforming its earning structure
to drive growth and stabilize management under “IDEAL to REAL 2023,” the new medium-term
management plan covering the period from the fiscal year ending December 31, 2021 through the period
ending December 31, 2023, as announced on February 24, 2021 (“Fourth Medium-term Management
Plan” hereinafter). While ES-CON Japan had considered raising funds through borrowing from financial
institutions or issue of corporate bonds, these methods would not enhance equity capital; the method of
increasing capital through a public offering could destabilize the shareholder structure and would notenable other business partnerships with Chubu Electric Power or take advantage of its strong credit.
Based on comprehensive consideration of these factors, the decision was made that this capital increaseby third-party allotment would be the most effective method, from ES-CON Japan’s point of view, toincrease its corporate value by achieving both stabilization of management and increased earnings
opportunities.
Plans call for Chubu Electric Power to shift from the status of an other affiliate to that of a parent
company of ES-CON Japan if this capital increase by third-party allotment is carried out. In such event,Chubu Electric Power would hold 51.54% (rounded to two decimal points) of voting rights of all ES-CON
Japan shareholders. For this reason, Chubu Electric Power qualifies as a specified subscriber under
Article 206-2, Paragraph 1 of the Companies Act of Japan.
In the meeting of the board of directors of ES-CON Japan held February 24, 2021, the three Directors(Auditor Directors) of ES-CON Japan (all three of whom are outside Directors and two of whom are
independent Directors) issued the opinion summarized below concerning the purposes, conditions ofissue, number of shares to be issued, and other matters related to this capital increase by third-party
allotment.
As described above, this capital increase by third-party allotment is intended to achieve the goals of
growing ES-CON Japan’s profitability and strengthening its management stability by promoting business
partnerships with the recipient of allotment. These goals are considered reasonable. In addition, theconditions of issue and number of shares to be issued are considered reasonable in light of the fact thatthey have been determined based on sustained consultations and negotiations with the recipient ofallotment based on the related objectives; the issue price conforms to the Japan Securities Dealers
Association’s Guidelines on Handling of Capital Increases through Third-party Allotment and does not
qualify as a particularly advantageous issue price. Furthermore, among other factors, since plans call for
obtaining the approval of the General Meeting of Shareholders for the conditions of issue of this capitalincrease by third-party allotment and since other procedures required under laws and regulations are
already underway, no serious breach of laws or regulations has been identified with regard to the
Directors’ judgment regarding implementation of this capital increase by third-party allotment.
No outside Director is of an opinion diverging from the decision of the ES-CON Japan board of directors.

3

3. Amount, purpose of use, and planned timing of investment of funds raised(1) Amount of funds raised(i)

Total pay-in amount(ii)

Rough estimate of costs of issue(iii)

Rough estimate of amount received after deduction of costs

Notes:

20,470,011,000 yen
100,000,000 yen
20,370,011,000 yen

1. The rough estimate of costs of issue does not include consumption tax.
2. The rough estimate of costs of issue is expected to include costs such as
financial advisors’ (FA) fees, attorneys’ fees, cost of preparation of securities
notification, and costs related to registration(2) Specific purpose of use of funds raised
Plans call for a rough estimate of amount received after deduction of costs of 20,370 million yen
above to be allocated to cover a portion of the cost of acquisition of real estate for the developmentof new revenue-generating real estate and holding in ownership, as summarized below.
The funds raised will be managed in ES-CON Japan’s bank accounts until their actual investment.
As a basic policy for establishing business foundations able to withstand unexpected changes in
economic conditions, as called for in the Fourth Medium-term Management Plan, ES-CON Japan isseeking to transition from an earnings foundation focused on flow revenues to one focused on stock
revenues. To do so, it has set numerical targets for the period of the Medium-term Management Plan
through FY2023 of increasing the share of segment profits from the real estate leasing business as partof total business segment revenues from the real estate sales, real estate leasing, and real estateplanning, brokering, and consulting business segments from its FY2020 level of 14.2% to 26% or higher
by FY2023, and of increasing ES-CON Japan’s consolidated net sales from the actual result of 77.3
billion yen in FY2020 to 110 billion yen in FY2023.
Funds raised through this capital increase by third-party allotment will be allocated to a portion of thefunding for the real estate business based on the following expenditure plans to achieve the goals of the
Fourth Medium-term Management Plan.
Specific uses

Amount(millions yen)

Planned timing ofinvestment

Fund-raising method(i)

Purchase and development ofrevenue-generating real estate

30,000March –
December 2021

Capital increase, loans,and funds on hand(ii)

Purchase and development ofrevenue-generating real estate

40,000January –December 2022

Capital increase, loans,and funds on hand(iii)

Purchase and development ofrevenue-generating real estate

60,000January –December 2023

Capital increase, loans,and funds on hand

Planned subjects of business investment are developments related to multipurpose developments
combining retail facilities, land zoned for retail development, rental residences, logistics facilities, andcondominiums and real estate intended to be held in ownership. As of the end of January 2021, thefollowing specific projects are planned:

4Project

Location

Hyogo Tojo II

Kato, Hyogo
Prefecture

Koga Gemboen

Koga, Fukuoka
Prefecture

Hokkaido Ballpark

Kitahiroshima,
Hokkaido

JR Kitahiroshima
Station West Area
Vitalization Project

Kitahiroshima,
Hokkaido

Fujishirodai
5-chome, Suita

Suita, Osaka
Prefecture

Planned timing ofinvestment
Logistics warehouse
Construction(28,000 square meters planned to begin
total floor area)
in April 2021
Logistics warehouse
Construction(56,000 square meters planned to begin
total floor area)
in May 2021
Acquisition of land
Multipurpose
planned to takedevelopment
place during(residential, commercial)
FY2021
Acquisition of land
Multipurpose
planned to takedevelopment
place during(residential, commercial)
FY2021
Multipurpose
Construction
development
planned to begin(residential, commercial) during FY2023
Use

Amount(million yen)
4,000
7,000

7,500

20,00017,000

4. Rationale concerning the reasonability of the uses of funds
ES-CON Japan intends to use the funds raised through this capital increase by third-party allotment toincrease its corporate value through the further growth of the ES-CON Japan Group and to achieve
profitability, as described under “3. Amount, purpose of use, and planned timing of investment of funds
raised: (2) Specific purpose of use of funds raised” above. Thus, these funds will also to contribute to themedium- to long-term interests of existing shareholders. In addition, as described under “2. Reasons forthis public offering of shares through third-party allotment” above, ES-CON Japan intends to grow its
profitability and to strengthen management stability by promoting business partnerships with Chubu
Electric Power. For these reasons, the purposes of use of funds raised through this capital increase by
third-party allotment are judged to be reasonable. See the Fourth Medium-term Management Plan,announced today, for more information on the further growth of the ES-CON Japan Group and securingof profitability.
5. Reasonability of conditions of issue, etc.
(1) Grounds for calculating the issue price and other specifics
We have chosen as the issue price of this capital increase through third party allotment (“issue
price” hereinafter) 769 yen, the closing price of shares of ES-CON JAPAN common stock at theTokyo Stock Exchange on the business date (February 22, 2021) immediately preceding the dateof the resolution of the board of directors concerning this capital increase through third party
allotment (“date of board of directors resolution” hereinafter). The closing price on the business
day immediately preceding the board of directors resolution was chosen because we deem themost recent share price to accurately reflect ES-CON JAPAN’s objective corporate value. Thisissue price of 769 yen reflects a premium of 0.13% vs. the average closing price of 768 yen(average prices hereinafter are rounded to the nearest whole number) over the one-month period(January 25 – February 22, 2021) through the business day immediately preceding the date of theboard of directors resolution, a discount of 7.35% vs. the average closing price of 830 yen over thethree-month period (November 24, 2020 – February 22, 2021) through the business day
immediately preceding the date of the board of directors resolution, and a discount of 9.53% vs.
the average closing price of 850 yen over the six-month period (August 24, 2020 – February 22,2021) through the business day immediately preceding the date of the board of directors resolution.
This issue price conforms to the Guidelines on Handling of Capital Increases Through Third-party
Allotment established by the Japan Securities Dealers Association. ES-CON JAPAN deems that
this does not constitute a particularly advantageous issue price. The board of directors resolution
on this capital increase through third-party allotment was unanimously approved by the directors.
In addition, External Director (Full-Time Auditor Director) Masayoshi Nishitake and independent
External Directors (Auditors) Hiroto Mizobata and Tadashi Fukuda have all three stated the viewthat since the paid-in amount of this capital increase through third-party allotment is based onmarket prices that objectively indicate the value of ES-CON JAPAN common stock and accounts
for recommendations under the Guidelines on Handling of Capital Increases Through Third-party

5

Allotment established by the Japan Securities Dealers Association, the action is legal and does
not constitute an inappropriately advantageous issue price.
(2) Grounds for determining that the number of shares to be issued and scale of dilution of shares isreasonable
Plans call for a number of 26,619,000 shares (266,190 voting rights) to be issued in this capitalincrease through third-party allotment, resulting in dilution at a rate of 38.24% vs. the 69,617,487
shares as of December 31, 2020 resulting from subtracting from the total number of shares issued
and outstanding of 71,961,887 shares the number of 2,344,400 shares of treasury stock (38.24%
vs. the 696,072 voting rights on the 69,607,200 shares as of December 31, 2020 after subtractingfrom the total number of shares issued and outstanding of 71,961,887 shares the number of
2,344,400 shares of treasury stock and 10,287 shares in less than the minimum trading unit as ofthat date).
However, since, as described under “2. Reasons for this public offering of shares through thirdparty allotment” above, this capital increase through third-party allotment is intended to grow ESCON JAPAN’s earnings potential and strengthen management capabilities by promoting joint
ventures with the planned recipient of the allotment; allocation of the funds raised through thiscapital increase through third-party allotment to the purpose of use described under “3. Amount,purpose of use, and planned timing of investment of funds raised: (2) Specific purpose of use offunds raised” can be expected to contribute to the interests of existing shareholders over the
medium to long term by increasing
ES-CON JAPAN’s corporate value through sustained growth of the Group and profitability; since
the number of shares to be issued is based on consultations and negotiations with the planned
recipient of the allotment based on the purposes thereof; and, in addition, as described under “6.
Grounds for selection of recipient of allotment, etc.: (3) Holding policy of the recipient of allotment”
below, it is the policy of the planned recipient of the allotment to continue to hold the sharesacquired for the medium to long term and is expected to be a stable shareholder, it has been
judged that both the quantity of shares to be issued and the scale of the dilution of shares arereasonable.
6. Grounds for selection of recipient of allotment, etc.
(1) Overview of the recipient of allotment (as of March 31, 2020)(1) Name
Chubu Electric Power Co., Inc.
1 Higashi-shincho, Higashi-ku, Nagoya-shi, Aichi(2) Address
Prefecture(3) Title and name of representative
Kingo Hayashi, President & Representative Director
Electricity business and businesses incidental to the(4) Lines of businesselectricity business(5) Capital
430,777 million yen(6)

May 1, 1951

(8)

Established
Total shares issued andoutstanding
Fiscal year ends

(9)

Employees

28,448 (consolidated)(7)(10) Main customers(11) Main banks
Main shareholders and their(12) percentages of shares held
(as of September 30, 2020)

758,000,000
March 31
Consumers, corporate customers, etc.
MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation,
Mizuho Bank, Ltd.
Custody Bank of Japan, Ltd.
13.33%The Master Trust Bank of Japan, Ltd.

9.12%

Meiji Yasuda Life Insurance Company

5.22%

Nippon Life Insurance Company

3.10%

6

Chubu Electric Employees’ Shareholders
Association
MUFJ Bank, Ltd.

2.57%
1.77%

Sumitomo Mitsui Banking Corporation
JP MORGAN CHASE BANK 385781 (Standing
proxy: Settlement & Clearing Services Dept.,
Mizuho Bank)
Mizuho Bank, Ltd.

1.58%
1.51%
1.40%

STATE STREET BANK WEST CLIENT –TREATY 505234 (Standing proxy: Settlement &Clearing Services Dept., Mizuho Bank)

1.19%(13) Relationships between the parties
As of February 24, 2021, the planned recipient of theallotment, with holdings of 22,980,000 shares, is ES-CON
JAPAN’s largest shareholder.
In March 2019, the planned recipient of the allotment
dispatched one director to ES-CON JAPAN. In addition,
Personal relationshipsince April 2019, two employees of ES-CON JAPAN havebeen seconded to the planned recipient of the allotment.
ES-CON JAPAN concluded an agreement on a capitalBusiness relationshipand business joint venture with the planned recipient of
the allotment effective August 28, 2018.
The planned recipient of the allotment is a related party
and ES-CON JAPAN’s largest shareholder, accounting for
Related party status
33.01% of total shares issued and outstanding (notincluding treasury stock).
Business results and financial condition over three most recent years(14)* Unit: millions yen (except as specified otherwise)
FY ended March FY ended March FY ended MarchFiscal period
2018
2019
2020
Consolidated net assets
1,791,942
1,844,362
1,962,065
Capital relationship

Consolidated gross assets
Consolidated net assets per share(yen)Consolidated net sales

5,529,408

5,987,526

5,500,815

2,285.87

2,350.52

2,504.68

2,853,309

3,035,082

3,065,954

Consolidated operating income

136,505

125,924

130,832

Consolidated ordinary income
Profit attributable to owners of theparentConsolidated profit per share (yen)128,532

112,929

191,803

74,372

79,422

163,472

98.24

104.96216.11

35.00

45.00

50.00

Dividends per share (yen)Note: Shares of the recipient of allotment, Chubu Electric Power, are traded on the First Section of theTokyo Stock Exchange. It has been determined through confirmation of the “Basic concept on
exclusion of antisocial forces, and state of maintenance thereof” under “Systems related tointernal controls etc.” in the “Corporate Governance Report” submitted by Chubu Electric Powerto the Tokyo Stock Exchange on November 16, 2020 that the recipient of allotment and its
executives have no ties to antisocial forces.
(2) Grounds for selection of recipient of allotment
See “2. Reasons for this public offering of shares through third-party allotment,” above.

7

(3) Holding policy of the planned recipient of allotment
ES-CON JAPAN has concluded an agreement on a capital and business joint venture with theplanned recipient of the allotment as a medium- to long-term partner. This capital increase throughthird-party allotment is intended to further strengthen the partnership between the two companies.
Accordingly, it has been confirmed by spoken agreement that the policy of the planned recipientof the allotment is to continue to hold the shares acquired for the medium to long term.
ES-CON JAPAN also plans to obtain a written pledge from the planned recipient of the allotment
consenting to report on the details thereof in writing if it sells all or part of the shares acquired
through this capital increase through third-party allotment within two years from the pay-in date.
These reports will be submitted to the Tokyo Stock Exchange and made available for public viewing.
(4) Details of confirmation of the state of assets of the recipient of allotment necessary for pay-in
ES-CON Japan has received from the recipient of allotment a report stating that it possesses thefunds needed to pay the total pay-in amount of this capital increase by third-party allotment. In
addition, it has been confirmed that the recipient of allotment has sufficient funding as necessary
for pay-in under this capital increase by third-party allotment through confirmation andcomprehensive consideration of matters such as the recipient of allotment’s operating revenues,
assets, capital, and cash and cash equivalents through the consolidated financial statements
presented in its financial reports for the third quarter of the fiscal year ending March 30, 2021
(October 1 – December 31, 2020), released by the recipient of allotment on February 5, 2021.
7. Main shareholders and their percentages of shares held after this issue
Before this issue (as of December 31, 2020)

After this issue

Chubu Electric Power Co., Inc.

33.01%

Chubu Electric Power Co., Inc.

51.54%

Nissei Build Kogyo Co., Ltd.

9.34%

Nissei Build Kogyo Co., Ltd.

6.75%

Tenma Seiryu Co., Ltd.

5.19%

Tenma Seiryu Co., Ltd.

3.75%

The Master Trust Bank of Japan, Ltd.
(account in trust)

3.57%

The Master Trust Bank of Japan, Ltd.
(account in trust)

2.59%

Custody Bank of Japan, Ltd. (accountin trust)

3.14%

Custody Bank of Japan, Ltd. (accountin trust)

2.27%

Koryu Oh

3.02%

Koryu Oh

2.18%

Takatoshi Ito

1.73%

Takatoshi Ito

1.25%

Custody Bank of Japan, Ltd. (accountin trust 5)

0.81%

Custody Bank of Japan, Ltd. (accountin trust 5)

0.59%

Keiko Akashi

0.76%

Keiko Akashi

0.55%

Custody Bank of Japan, Ltd. (accountCustody Bank of Japan, Ltd. (account
0.74%
0.53%
in trust 6)
in trust 6)
Notes: 1. The composition of main shareholders before this issue is based on the shareholder
register as of December 31, 2020.
2. Percentages of shares held are rounded to the second decimal point.
3. Percentages of shares held after this issue are calculated using as the denominator
the figure for voting rights (696,072 voting rights) for the total of 69,607,200 sharesobtained by subtracting from the total of 71,961,887 shares issued and outstanding asof December 31, 2020, 2,344,400 shares of treasury stock, and 10,287 shares in lessthan the minimum trading unit as of that same date, plus the increase in voting rights(266,190 voting rights) resulting from this capital increase by third-party allotment(962,262 voting rights). Percentages of shares held by shareholders other than Chubu
Electric Power assume no change in shareholdings since December 31, 2020.

8

8. Future outlook
As described under “I. Issue of New Shares through Third-party Allotment: 3. Amount, purpose of use,and planned timing of investment of funds raised: (2) Specific purpose of use of funds raised,”
ES-CON Japan today announced its Fourth Medium-term Management Plan. This Fourth Medium-termManagement Plan is premised on the execution of this capital increase by third-party allotment andbusiness partnership. For more information on the future outlook, please refer to the news release “Noticeof Formulation of the Fourth Medium-term Management Plan, “IDEAL to REAL 2023”” issued today.
9. Matters related to procedures under the Corporate Code of Conduct
The prospective number of shares of stock to be issued under this capital increase by third-party
allotment is 26,619,000 shares (266,190 voting rights). This will result in a dilution of 36.99% vs. the total
number of 71,961,887 shares issued and outstanding as of December 31, 2020 (38.24% vs. voting rights[696,072 voting rights] on the total of 69,607,200 shares obtained by subtracting from the total numberof 71,961,887 shares issued and outstanding as of December 31, 2020, 2,344,400 shares of treasury
stock, and 10,287 shares in less than the minimum trading unit as of that same date). In addition, upon
the completion of this capital increase by third-party allotment, the recipient of allotment, Chubu ElectricPower, will own 51.54% of voting rights, resulting in a transition from status of ES-CON Japan otheraffiliate to parent company.
Accordingly, since this capital increase by third-party allotment qualifies as a large-scale third-party
allotment under the provisions of the Notes (23-6) to Form No. 2 of the Cabinet Office Order on Corporate
Disclosure; and since implementation of this capital increase by third-party allotment is expected tochange the majority shareholder of ES-CON Japan, making the recipient of allotment, Chubu ElectricPower, ES-CON Japan’s majority shareholder, the requirements for third-party allotment stipulated in
Article 432 of the rules for listed forms of the Tokyo Stock Exchange apply to this capital increase by
third-party allotment, requiring either “obtaining the opinion of a party with a degree of independence
from management concerning the necessity and propriety of the allotment” under Paragraph 1 of that
article or “confirmation of shareholder intentions through means such as a resolution of the General
Meeting of Shareholders regarding the allotment” under Paragraph 2 of that article. For this reason,
ES-CON Japan plans to confirm shareholder intentions by seeking shareholder approval for proposals
related to this capital increase by third-party allotment in the General Meeting of Shareholders. In addition,although in this capital increase by third-party allotment, Chubu Electric Power, the recipient of allotment,
qualifies as a specified subscriber under the provisions of Article 206-2, Paragraph 1 of the Companies
Act, and approval of a General Meeting of Shareholders is required if shareholders holding at least 10%of all shareholder voting rights submit notice of opposition to subscription by a specified subscriber(Article 206-2, Paragraph 4 of the Companies Act), in light of the importance of this capital increase by
third-party allotment, ES-CON Japan plans to submit the proposals related to this capital increase by
third-party allotment to the Ordinary General Meeting of Shareholders, whether or not such notice of
opposition is submitted.
10. Business results and equity finance during three most recent years(1) Business results (consolidated) during three most recent years)* Unit: millions yen (except as specified otherwise)
FY ended
FY ended
December 2018 December 2019

FY ended
December 2020

Consolidated net sales

54,325

72,10677,308

Consolidated operating income

11,561

12,912

12,202

Consolidated ordinary income

10,498

11,81011,164

Profit attributable to owners of the parent

7,226

8,155

7,663

Consolidated profit per share (yen)105.98119.17111.94

Dividends per share (yen)

32.00

36.00

38.00

Consolidated net assets per share (yen)400.47490.08563.079

(2) Status of total shares issued and outstanding and dilutive shares at this time (as of December 31,
2020)
Percentage of shares
Sharesissued and outstanding
Shares issued and outstanding

71,961,887 shares

100.00%1,244,500 shares

1.73%- shares-%- shares-%

Dilutive shares at current conversion price(exercise price)
Dilutive shares at minimum conversion
price (exercise price)
Dilutive shares at maximum conversion
price (exercise price)(3) Recent stock price conditions(i) Conditions in most recent three years
FY ended
December 2018

FY ended
December 2019

FY ended
December 2020

Opening price665 yen

635 yen928 yenHigh

1,063 yen

1,025 yen

1,002 yenLow

612 yen

634 yen

500 yen

Closing price

646 yen

937 yen

816 yen(ii) Conditions in most recent six months
September
October
2020
2020

November
2020

December
2020

January2021

February
2021

Opening price759 yen

870 yen

849 yen920 yen

823 yen

726 yenHigh

892 yen

1,002 yen

947 yen

930 yen

827 yen

797 yenLow

746 yen

834 yen

844 yen

805 yen732 yen721 yen

Closing price

867 yen

845 yen922 yen

816 yen732 yen769 yenNote: The share price for February 2021 above is the price as of February 22, 2021.
(iii) Share price on the business day immediately preceding the date of the resolution on issue
February 22, 2021
Opening price

768 yenHigh

777 yenLow

763 yen

Closing price769 yen10(4) Conditions of equity financing over most recent three years(i) Disposal of treasury stock by third-party allotment related to adoption of performance-based
stock reward system
Date of disposal

May 14, 2020

Amount of funds raised

207,240,000 yen (rough estimate of amount received after
deduction of costs)

Disposal price628 yenTotal shares issued andoutstanding at time of disposal

71,841,887 shares

Total shares disposed of

330,000 shares

Total shares issued andoutstanding after disposal

71,841,887 shares

Recipient of allotment

Japan Trustee Services Bank, Ltd. (account in trust)

Initial use of funds at time ofdisposal
Planned time of investment at timeof disposal
State of allocation at this time

Allotment to working capital
May 14, 2020
Full amount allotted

Note: Effective July 27, 2020, Japan Trustee Services Bank, Ltd. merged with JTC Holdings, Ltd.
and Trust & Custody Services Bank, Ltd. to form Custody Bank of Japan, Ltd.
II. Partial amendment of the Articles of Association to increase the authorized number of shares
1. Purpose of amendment
To increase the authorized number of shares under Article 6 (Authorized Number of Shares to be
Issued) of the current Articles of Association within a range not to exceed four times the total number ofshares issued and outstanding of ES-CON Japan stock at the time the amendment to the Articles of
Association would take effect (71,961,887 shares), pursuant to Article 113, Paragraph 3 of theCompanies Act, in order to enable the issue of new shares through this capital increase by third-party
allotment (“amendment of the Articles of Association” hereinafter).
2. Specifics of amendment to the Articles of Association
The specifics of the amendment to the Articles of Association are as follows.
(Underlined passages indicate changes.)
Current Articles of Association

Proposed amendment

Article 6. Authorized Number of Shares to be
IssuedThe authorized number of shares to be issued
by ES-CON JAPAN shall be 72,000,000 shares.

Article 6. Authorized Number of Shares to be
IssuedThe authorized number of shares to be issued
by ES-CON JAPAN shall be 99,000,000 shares.

3. Schedule
The proposed schedule of this amendment of the Articles of Association is as follows.
Date of resolution by board of directors:
Date of General Meeting of Shareholders:
Effective date of amendment of the Articles of Association:

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February 24, 2021
March 26, 2021 (planned)
March 26, 2021 (planned)

III. Change to parent company and other affiliates (planned)
1. Background of this changeThis capital increase by third-party allotment is expected to affect ES-CON Japan’s parent company,
as outlined below.
2. Overview of shareholders subject to change
An overview of the shareholder subject to this change is provided under “I. Issue of New Sharesthrough Third-party Allotment: 6. Grounds for Selection of the Recipient of Allotment, etc.: (1) Overview
of the Recipient of Allotment,” above.
3. Number of voting rights held by the recipient of allotment and percentage of total shareholder voting
rights held before and after this change
Shareholder positioned to become the new parent company
Name: Chubu Electric Power Co., Inc.
Voting rights (percentage of total voting rights)
StatusSubject to
Directly owned
Total
totaling
Before229,800 voting
229,800 voting- voting rights(as of February
Other affiliate
rightsrights(-%)
24, 2021)(33.01%)(33.01%)495,990 voting
495,990 voting- voting rights
After
Parent company
rightsrights(-%)(51.54%)(51.54%)
Notes: 1. The percentage of voting rights held before this change is calculated using as thedenominator the figure for voting rights (696,072 voting rights) for the total of
69,607,200 shares obtained by subtracting from the total of 71,961,887 shares issued
and outstanding as of December 31, 2020, 2,344,400 shares of treasury stock, and10,287 shares in less than the minimum trading unit as of that same date.
2. The percentage of voting rights held before this change is calculated by adding to thenumber of voting rights held before this change (696,072 voting rights) the increase in
the number of voting rights resulting from this capital increase by third-party allotment(266,190 voting rights).
3. Percentages of voting rights held before and after this change are rounded to two
decimal places.
4. Planned date of change
April 5, 2021
5. Change in unlisted parent company subject to disclosure
Not applicable
6. Future prospects
Chubu Electric Power’s policy on holding of these shares is as described under “I. Issue of new sharesthrough third-party allotment: 6. Grounds for selection of the recipient of allotment, etc.: (3) Holding policyof the recipient of allotment,” above.
IV. Overview of the capital and business joint venture
An overview of the business partnership is provided below. Upon the conclusion of the business
partnership agreement, the business partnership agreement concluded August 28, 2018 with Chubu
Electric Power shall be invaliddated.
1. Details of the business tie-up(1) Details of business partnership
In the agreement on the capital and business joint venture concluded between ES-CON JAPAN and
Chubu Electric Power on February 24, 2021, both companies agree to a business joint venture basedon the following major points to promote business progress and increase the corporate value of both
firms:

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(i) Enhancing joint efforts related to energy supply and facility construction(ii) Joint research and joint implementation in businesses related to next-generation smart houses,
connected homes, and so forth(iii) Further enhancing the partnership with Chuden Real Estate, a member of the Chubu ElectricPower Group(iv) Enhancing partnerships related to the effective utilization and development of unused orunderused land belonging to the Chubu Electric Power Group(v) Joint initiatives in businesses that constitute to society, including urban development
Plans call for ES-CON JAPAN and Chubu Electric Power to discuss details of this business joint
venture following the conclusion of the agreement on the capital and business joint venture.
(2) Details of capital tie-up
As described above, ES-CON Japan will allot shares of common stock in ES-CON Japan to Chubu
Electric Power, as the recipient, through the issue of new shares through this capital increase
throuogh third-party allotment.
2. Overview of the partner
An overview of the partner is provided under “I. Issue of new shares through third-party allotment: 6.
Grounds for selection of the recipient of allotment, etc.: (1) Overview of the recipient of allotment,” above.
3. Future outlook
The future outlook is as described under “I. Issue of new shares through third-party allotment: 8. Future
outlook,” above.

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(Annex)
ES-CON Japan Ltd. Outline of Issue of Common Stock

1.

Type of shares to be issued
Common stock2.

Number of shares to be issued
26,619,000 shares

3.

Pay-in amount on shares to be issued
769 yen per share

4.

Total pay-in amount
20,470,011,000 yen

5.

Method of investment
Intended for investment of monetary funds

6.

Pay-in date
April 5, 2021

7.

Matters related to increases in capital and capital reserves
The amount of the increase in capital shall be 10,235,005,500 yen (384.5 yen per share). The
amount of the increase in capital reserves shall be 10,235,005,500 yen (384.5 yen per share).

8.

Method of offering or allotment
Third-party allotment

9.

Recipient of allotment and number of shares to be allotted
Chubu Electric Power: 26,619,000 shares

10. Location of handling of pay-in
Dojima Branch, Sumitomo Mitsui Banking Corporation
11. Other matters
The pay-in of funds outlined by each of the items above is conditional on the validity of the securities
notification under the Financial Instruments and Exchange Act; the lawful and valid receipt by theJapan Fair Trade Commission of the notification stipulated in Article 10, Paragraph 2 of the Act on
Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947 andsubsequent amendments); the passage of 30 days (or shortened period if said period is shortenedby the Japan Fair Trade Commission under the proviso to Article 10, Paragraph 8 of that Act) fromthe date of receipt of such notification; approval at the General Meeting of Shareholders of proposals
related to this capital increase by third-party allotment; and satisfying the preconditions stipulated in
the business partnership agreement.

14